Closing Markets Summary

Dow Jones

Stocks in the US stocks closed higher on Wednesday as investors largely ignored the ongoing geopolitical jitters surrounding North Korea and energy shares rallied as oil refineries continued to come back online following shut downs caused by hurricane Hugo. Also helping sentiment was a report that President Donald Trump and lawmakers had reached a deal to extend the deadline on the debt ceiling by three months. The market’s reaction to news that Federal Reserve Vice Chairman Stanley Fischer was set to resign next month was muted. Fischer intends to resign from his post in mid-October. His term was set to end in June. In a letter to President Donald Trump, Fischer, 73, said he was leaving for personal reasons. Economic data showed that the trade deficit rose slightly in July, keeping the US on track to post a larger gap in 2017 than in 2016. The deficit edged up to $43.7 billion in July from $43.5 billion in June. Services activity came in better than forecasts, the ISM services came in at 55.3 in August, compared with 53.9 in the prior period. Companies that featured included Gap Inc. which rose7.5% after the company reported that it expects its Old Navy brand to reach $10 billion in sales over the next few years. Macy’s Inc. and Kohl’s Corp were also sharply higher as industry executives were speaking at the Goldman Sachs Global Retailing Conference. Macy’s advanced 5.5%, while Kohls shares gained 4.9%. US-listed shares of Trivago NV fell 16% after the German hotel search platform cut its guidance, saying earnings for the third quarter and full year would be lower than previously expected. Hewlett Packard Enterprise Co. fell 1.9% even as the company late Tuesday reported earnings that beat forecasts after the spinoff of some software assets. The S&P 500 closed up 7.69 points at 2.465.54. The Dow Jones closed up 54.33 points at 21,807.64. The Nasdaq Composite closed up 17.74 points at 6,393.31. 17.

Europe

European equity markets finished a choppy trading session slightly higher on Wednesday, with German stocks leading the moves higher as auto makers advanced after key ratings upgrades. Gains in the region, however, were kept in check by continued concerns over North Korea’s nuclear program and insurance companies struggling as Category 5 Hurricane Irma moved closer toward the US After opening in negative territory, the pan-European Stoxx Europe 600 index closed up 0.1 at 373.95. Investors were also focused on the upcoming European Central Bank’s rate decision and press conference due on Thursday, where the key question is whether the policy makers will take the first steps toward tapering its €60-billion-a-month bond-buying program or hold off out of fear of ruining the economic recovery. Shares of insurance firms were in focus as Hurricane Irma, described as a “potentially catastrophic” Category 5 storm in the Atlantic Ocean, made landfall in the Caribbean. The storm front is seen heading toward the Virgin Islands, Puerto Rico and Florida, where a state of emergency has been declared. The Stoxx Europe 600 Insurance Index was down 0.4%, as shares of Swiss insurer Zurich Insurance Group AG dropped 0.7% and Swiss Re AG dropped 0.9% lower. Economic data showed that orders in Germany’s manufacturing sector dropped in July, falling 0.7% on the month, compared with forecasts for a 0.4% rise. Other companies that featured included Micro Focus International PLC which rose 6.2% after the company issued financial results from its new software business, purchased from Hewlett Packard Enterprises. Auto makers in Germany moved higher as new car registrations in Germany rose 3.5% on the year in August. Daimler AG rose 3.2% after Goldman Sachs upgraded the auto maker to buy from neutral. Volkswagen AG rose 1.6% and BMW AG rose 1.6%. Fiat Chrysler Automobiles NV rose 4.3% after Barclays lifted the car manufacturer to overweight from equalweight. On regional markets the CAC closed up 14.85 points at 5,101.41, the DAX closed up 90.82 points at 12,214.54 and the IBEX closed down 48.80 points at 10,131.00.

FTSE

The FTSE 100 closed lower on Wednesday underperforming its European peers as a rising Pound weighed on the index’s exporters and insurers fell as Hurricane Irma hit the Caribbean. Sterling continued to move higher on Wednesday, rising to a three-week high of $1.3069, compared with $1.3033 late Tuesday in New York, and $1.2932 late Monday. The Pound dropped against the Dollar, as the Dollar weakened on speculation that Hurricane Irma will strengthen the case for the US Federal Reserve to leave interest rates on hold for the rest of the year. A stronger sterling weighed on the index’s internationally exposed names, with shares of Burberry Group PLC down 1.4%, BAE Systems PLC fell 2.7% and Rolls-Royce Holdings PLC moved down 0.9%. Insurers moved lower as Hurricane Irma as being described as a potentially catastrophic Category 5 storm in the Atlantic Ocean and was hitting islands in the Caribbean and heading toward the Virgin Islands, Puerto Rico and Florida. Prudential PLC dropped 0.8%, Beazley PLC fell 5.7%, Hiscox Ltd. fell 1.8%, and Lancashire Holdings Ltd. fell 2.9%. Home builder Berkeley Group fell 2.5% as the home builder said the London market continued to be adversely impacted by Brexit uncertainty and changes to stamp-duty land tax. Barratt fell 4.8% even the home builder said it would return £175 million to shareholders in the form of a special dividend as a result of strong fiscal 2017 earnings. The FTSE closed down 18.79 points at 7,354.13.

Economic News Expected Today

USA

Type

Period

Forecast

Previous

Importance

Continuing Jobless Claims

Sept

1,950K

1,942K

Medium

Initial Jobless Claims

Sept

241K

236K

Medium

Nonfarm productivity

Q2

1.3% q/q

0.9% q/q

Medium

Unit Labour Costs

Q2

0.3% q/q

0.6% q/q

Medium

Bloomberg Consumer Confidence

Sept

53.3

Low

Crude Oil Inventories

Sept

4.700M

-5.392M

High

FOMC Member Mester Speaks

Sept

Medium

Economic News Expected Today

Eurozone

Type

Period

Forecast

Previous

Importance

Industrial Production (Germany)

July

0.6% m/m

-1.1% m/m

Medium

Trade Balance (France)

July

-€4.5B

-€4.7B

Low

GDP (Eurozone)

Q2

0.6% q/q; 2.2% y/y

0.6% q/q; 2.2% y/y

Medium

Deposit Facility Rate (Eurozone)

Sept

-0.40%

-0.40%

High

ECB Interest Rate Decision (Eurozone)

Sept

0.00%

0.00%

High

ECB Press Conference (Eurozone)

Sept

High

Economic News Expected Today

United Kingdom

Type

Period

Forecast

Previous

Importance

Halifax House Price Index

August

0.2% m/m; 2.1% y/y

0.4% m/m; 2.1% y/y

Medium

Other Global Economic Data Expected

Type

Period

Forecast

Previous

Importance

Retail Sales (Australia)

July

0.3% m/m

0.3% m/m

High

Trade Balance (Australia)

July

0.875B

0.856B

Medium

Ivey PMI (Canada)

August

61.3

60.0

High

Economic News Round Up

Service sector activity in the US increased slightly less than forecast in August. The Institute of Supply Management reported that its non-manufacturing PMI increased to 55.3 in August from the prior month’s reading of 53.9. Forecasts were for the index to rise to 55.4 last month. The Non-Manufacturing Business Activity Index increased to 57.5 last month, 1.6 points above July’s reading of 55.9 and better than the forecast of 56.0. The New Orders Index registered 57.1 in August, 2.0 points higher than the reading of 55.1 in the previous month. The Employment Index rose 2.6 points to 56.2 last month from July’s reading of 53.6. The Prices Index increased 2.2 points to 57.9 in August from the prior month’s reading of 55.7. US mortgage applications to refinance a home increased to their highest level in 11 weeks as home borrowing costs declined to their lowest levels since November, the Mortgage Bankers Association said on Wednesday. Last week, the average interest rate on conforming 30-year fixed-rate mortgages fell to 4.06%, a nine-month low, from 4.11% the prior week.

The Bank of Canada raised interest rates, saying that growth in the country’s economy is becoming more broad-based and self-sustaining.

The Bank of Canada raised the cash rate to 1.0% from 0.75% previously. It also raised the bank rate to 1.25% and the deposit rate to 0.75%. In a statement, the bank said consumer spending remains robust, underpinned by continued solid employment and income growth. Statistic Canada reported that Canada’s trade deficit in July shrank to CAD$3.04 billion, thanks mainly to a strong Canadian dollar that cut the value of imports and also helped depress exports. Forecasts were for a shortfall of CAD$3.1 billion. June’s deficit was revised to CAD$3.76 billion in June from an initial CAD$3.60 billion. In volume terms, imports fell by 2.3% while exports dropped by 1.1%.

Forex Round Up

The Dollar was broadly lower against the other major currencies on Wednesday, after the release of below forecast US data and as uncertainty over the future path of US interest rates weighed. The Institute of Supply Management reported that US service sector activity increased slightly less than forecast in August. The Dollar was already under pressure after Federal Reserve official Lael Brainard said on Tuesday that the central bank should delay raising interest rates until it is confident inflation that is now “well short” of target will rebound.

The Yen and Swiss franc were both lower, with the USD/JPY up 0.23% at ¥109.06 and the USD/CHF was up 0.15% at Fr0.9568. The EUR/USD was up 0.09% at $1.1924 and the GBP/USD was up 0.12% at $1.3048, just off a four-week high of $1.3066 hit earlier in the day.

The Australian and New Zealand dollars were both lower with the AUD/USD down 0.11% at $0.7987 and the NZD/USD was down 0.28% at $0.7213. The USD/CAD fell 1.44% to a 27-month low of CAD$1.2198 after the Bank of Canada raised interest rates to 1.0% from 0.75%, saying that growth in the country’s economy is becoming more broad-based and self-sustaining. The US Dollar Index was down 0.15% at 92.14.

Commodity Round Up

Gold ended lower on Wednesday, ending a three-day winning streak after the White House and lawmakers reached a deal to extend the deadline on the federal government’s debt ceiling and as stocks recouped some of their losses from the previous session. Gold for December delivery fell $5.50 to settle at $1,339 per ounce. Silver for December delivery fell $0.03 to settle at $17.91 per ounce.

Oil futures ended higher on Wednesday as Gulf Coast refiners continued to resume operations following the shutdowns caused by Hurricane Harvey. West Texas Intermediate crude for October delivery rose $0.50 to settle at $49.16 per barrel. Brent rose $0.82 to $54.20.

The MarketsWorld Overview

The ECB rate decision and press conference due today will be closely watched by investors, whilst no change in rates are expected investors will be looking for clues on future monetary policy. Will the ECB announce QE tapering? And what will the scale be? The central bank previously said that they will make a decision in the Autumn. The bond-buying scheme currently consists of €60 billion per month until the end of 2017 and the big question is for the future of the program in early 2018. The ECB could delay the decision to the October meeting. The ECB releases new forecasts for inflation and growth right now and they usually make decisions around the decisions that include new forecasts. Monitor the Euro for Binary Options trading.

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